{"id":286887,"date":"2021-01-26T08:35:56","date_gmt":"2021-01-26T13:35:56","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/bankruptcy\/before-you-file\/avoiding-credit-repair-and-credit-counseling-scams.html"},"modified":"2024-06-22T19:17:31","modified_gmt":"2024-06-23T00:17:31","slug":"avoiding-credit-repair-and-credit-counseling-scams","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/bankruptcy\/before-you-file\/avoiding-credit-repair-and-credit-counseling-scams.html","title":{"rendered":"Avoiding Credit Repair and Credit Counseling Scams"},"content":{"rendered":"\n
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Avoiding Credit Repair and Credit Counseling Scams<\/h1>\n
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\n By FindLaw Staff<\/a> | Legally reviewed by Susan Mills Richmond, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

Before filing for bankruptcy, most people attempt to consolidate their credit and eliminate debt. They turn to credit repair services and debt relief companies. The problem is that not all companies have your best interests at heart. You need to be wary of companies that make promises that are too good to be true.<\/p>\r\n

The Consumer Financial Protection Bureau does a lot to protect people in your position. However, they can only do so much. You should do your homework before engaging with any debt consolidation company.<\/p>\r\n

Here, we’ll help you avoid shady consumer credit repair companies and credit counseling scams.<\/p>\r\n

Are You a Target for a Credit Counseling Scam?<\/h2>\r\n

Credit card debt repair companies market directly to people with poor credit histories. They promise to clean up their credit reports for a fee. The truth is, after you pay hundreds (or thousands) of dollars in up-front fees, these companies do nothing to improve your credit score. Worse yet, one of these "credit repair<\/a> organizations" may vanish with your hard-earned money.<\/p>\r\n

Falling victim to one of these scams does not mean you are foolish. All it means is that you want to reduce or consolidate your debt and need help. You don’t go into it thinking that the people on the other end of the phone may commit identity theft.<\/p>\r\n

If you’re like most consumers, you assume that credit counseling agencies have relationships with lenders and, therefore, can settle your debts for less than you owe. You don’t realize these companies pepper their clients with negative information about financial institutions and make promises they cannot keep.<\/p>\r\n

Are All Credit Counseling Programs Scams?<\/h2>\r\n

Over a million Americans file for bankruptcy<\/a> every year, and the average household debt is at an all-time high. Some companies take advantage of people who are worried about their debt<\/a> and credit scores<\/a>.<\/p>\r\n

Some of these so-called "credit counselors" and "credit repair companies" conduct business dishonestly, exploiting unsuspecting customers. Not all of these companies are scams, but there are many to watch out for. Sometimes, filing for bankruptcy is a better choice than seeking credit counseling<\/a>.<\/p>\r\n

There are credit counseling agencies<\/a> that are reputable and provide valuable services to financially overwhelmed consumers. Sadly, it can be hard to tell the difference between these agencies and companies that will do anything to get you to write a check.<\/p>\r\n

Generally, if the company contacts you first, they have paid for your data and are not reputable credit counselors.<\/p>\r\n

Warning Signs of a Credit Repair Scam<\/h2>\r\n

Legitimate credit counseling agencies will never suggest that you do something illegal. For example, some scammers claim they can get you a new credit identity by obtaining an Employer Identification Number (EIN) for you to use instead of your Social Security number.<\/p>\r\n

It’s against the law to secure personal loans and credit cards using fake information. If a company tells you this is the best solution for you, they’re up to no good.<\/p>\r\n

There are some things to look for when searching for a reputable debt repair company. There are also warning signs that a company or agency is not on the up and up.<\/p>\r\n

You should take caution if the \u201ccredit repair" company does the following:<\/p>\r\n